ECO 550 Week 10 Quiz 8http://homeworkfox.com/tutorials/economics/43 85/eco-550-week-10-quiz-8/Economics - General Economics1. Which of the following is a cost borne by an employee?The cost incurred in looking for alternative job opportunitiesA fall in overall productivity as a result of hiring the wrong personThe cost of training in the new firmThe cost of extra work done by existing employees due to an unfilled positionQuestion 21. An important distinction between the labor market and the market for commodities is:that contracts are arrived at more easily in the former.the individual attributes of the buyer and seller hold far more importance in the former case.that it is impossible to prevent breach of contract in the labor market.that the market for commodities is a matching market while the former is not.Question 31. A written contract between an employer and an employee creates value as long as:the benefits exceed the costs of forming and enforcing it.the productivity of the employee is equivalent to the wage.on-the-job learning is unimportant.the relationship between the employer and the employee is short-term.Question 41. Marginal product of labor is:the extra output produced by an additional worker, all else unchanged.
the extra wage earned by an additional worker, all else unchanged.the total output produced when an extra worker is hired.the total revenue earned when an extra worker is hired.Question 51. In competitive markets, the elasticity of labor supply is:unrelated to time.inversely proportional to time elapsed since a wage change.unity.directly proportional to time elapsed since a wage change.Question 61. Opportunistic behavior on the part of the employer is possible because:contracts are often incomplete and leave room for implicit understandings between the two parties.employees often reduce their effort level if they are important to the company.it is difficult to monitor all employees and their performances.good quality work can be easily measured.Question 71. Which of the following events will cause a downward movement along the value of marginalproduct of labor curve?An increase in wage rateAn increase in price of the productA decrease in wage rateA decrease in price of the productQuestion 81. _____ represents a firm’s demand curve for labor.The value of marginal productMarginal product
Marginal revenue curveThe horizontal line at the market wage rateQuestion 91. Which of the following will have a downward impact on efficiency wages?Low monitoring costsExcess supply in the labor marketHigh equilibrium wage rateExcess demand in the labor marketQuestion 101. Jason is a salesman who gets 40 percent of the revenue he generates for his company. This is anexample of payment by _____.piece rentfixed salaryexecutive compensationshare contractQuestion 111. In long-term job attachments, a worker’s wage:always exceeds his productivity.always falls below his productivity.is lower than his productivity at the beginning, then equals it, and then exceeds the same.is higher than his productivity at the beginning, then equals it, and then falls below the same.Question 121. A competitive firm hires workers as long as:marginal product of labor is positive.value of marginal product of labor is positive.marginal product of labor is greater than the wage rate.
value of marginal product of labor is greater than the wage rate.Question 131. Influence cost is a type of _____ incurred while filling positions that have similar responsibilitiesbut carry different pay.deadweight lossopportunity costexternalitysocial costQuestion 141. Assume that a firm is operating in the short run and all resources are fixed except for labor. Thetotal product curve for this firm will increase at a decreasing rate because:value of marginal product of labor is unchanged as more labor is hired.marginal product of labor will decline as more labor is hired.value of marginal product of labor will increase as more labor is hired.marginal product of labor is unchanged as more labor is hired.Question 151. The general health of the population of a country improves as its medical support system improves.Which of the following is a likely outcome of this?Marginal product of labor will increase.Value of marginal product of labor will fall.The equilibrium wage rate will decline.There will be excess supply of labor in the market.Question 162. A risky borrower can pay a lower interest rate if:she invests the amount in a profitable business.she can assure the lender of a low inflation rate.she makes a promise to repay within a short interval.
she can arrange for a collateral.Question 172. Two events A and B in a sample space are considered _____ if the probability that A will happen isthe same regardless of whether or not B has happened.conditionalcorrelatedindependentexclusiveQuestion 182. Which of the following properties can be associated with an indifference curve of a risk-averseinvestor? AnswerIndifference curve for a risk-averse investor is a vertical line parallel to the variance axis.Two indifference curves can intersect at the equilibrium combination of risk and return.An indifference curve closer to the expected return axis gives a better utility than the one farther away.Indifference curve for a risk-averse investor is always downward sloping.Question 192. Refer to Figure 16-1. The conditional probability Pr[A/B] will be:In the figure given below A and B are two sets, such that Pr[A and B]=1/3, Pr[A]=2/4, Pr[B]=3/4.Figure 16-14/9.2/9.4/6.2/6.Question 202. Rational individuals prefer to consume goods during the current year rather than in the futurebecause of:positive time preference.
positive consumption preference.high expected rate of inflation.high market rate of interest.Question 212. Individuals in favor of privatization of Social Security believe that it would allow people to:evade the exorbitant rates of Social Security taxes.substitute purchases of stocks and other financial assets for a portion of their Social Security taxes.lower their medical bill by taking extra precaution and care for their health.experience a lower inflation in healthcare services.Question 222. A(n) _____ is a set of equal annual payments received by an investor from the investment.perpetuityannuityinterestcapital valueQuestion 232. If A and B are two disjoint sets, and “Pr” represents the probability, then Pr[A and B] will be:negative.infinity.unity.zero.Question 242. A _____ is a function that takes on a defined value for every point in the sample space.discrete variablerandom variable
dependent variablecontinuous variableQuestion 252. Which of the following is a characteristic of a real option?The call option on a stock exercised if some average of the prices of its components passes a criticallevel.The right to postpone construction on the basis of net present value calculation.The put option on a stock that need to be paid for (at a predetermined price) if they are actuallyexercised.The right to sell an option at the strike price.Question 262. A derivative is any financial instrument whose value depends on the:extent of asset diversification.expected rate of inflation.purchasing power of the people.value of an underlying asset.Question 272. A loan used as an investment turns out to be profitable if the sale price of its output covers the_____ of all other inputs and interest on the funds loaned.internal costsmarginal costopportunity costaverage costQuestion 282. The value of a real option varies with all of the following, EXCEPT:the range of outcomes.the rate of interest.
the rate of unemployment.the delay in resolving uncertainty.Question 292. Diversification of a portfolio leads to:a negative correlation between the investments.a lower mean of returns.a lower variance of returns.a higher standard deviation of returns.Question 302. Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root ofwealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability ofincreasing his total wealth to $100,000 and 0.4 probability of decreasing it to $30,000. What will beJeff’s expected utility from the gamble?15 utils8.19 utils3.2 utils12.12 utils